12790 - 12730 a sacrosanct support zone for Nifty: Angel Broking

Although the overall trend has been strongly up, traders should still avoid aggressive bets

Nifty Outlook

Last week was yet another week of consolidation for our market after a relentless rally in the first half of the November month. Nifty registered a fresh record high of 13,145.85, but saw some profit-booking at higher levels. However, it didn’t correct much; because the undertone still remains strongly bullish. In fact, we saw modest recovery towards the fag end to conclude the week with nearly a per cent gain around the 13,000-mark.  

The November month has been the historical one for our markets as we saw two key indices, Nifty and Bank Nifty clocking sizable gains over 11 per cent and 23 per cent, respectively. In the midst of all this, Nifty surpassed its previous record high and reached the milestone of 13,000. Clearly, FIIs have been the charioteer of this mesmerizing rally as they relentlessly pumped money into our market to mark the biggest single month inflows over Rs 50,000 crores. Now, coming back to the levels, 13,040 - 13,146 remains to be an immediate resistance zone; whereas on the lower side, 12,900 - 12,868 - 12,790 can be seen as a cluster of supports. With this week’s minor decline, 12790 - 12730 has become a sacrosanct support and till the time it is not breached convincingly, one should trade with a positive bias.   

Although the overall trend has been strongly up, we still believe that one should avoid aggressive bets, and rather focus on individual stocks with proper risk management. The ideal range for coming sessions would be 13,150 - 12,730 and till the time we do not breakout outside this range, we are likely to see trades on both sides, especially in indices. Above 13,150, next levels to watch out for would be 13,250 - 13,400 and the move will not be as swift as it has been in the recent past. The real action continues in the broader markets as we can see stellar moves in lot of mid and small counters. 

Stock recommendations: 

NSE Scrip Code – ONGC 

View  –  Bullish 

Last Close  –  Rs. 78.50 

Justification – This one of the ‘Maharatna’ companies in India has failed to live up to the expectations of investors over the past six years now. After such a long stint of underperformance, we are now observing some early signs of revival. In the month of November, the stock prices clocked handsome gains over 20 per cent and, importantly, it’s backed by considerably higher volumes, which is a sign of strong buying interest in the stock. In this process, prices convincingly surpassed ‘200-day SMA’ for the first time since July 2019 and are spending some time above it. All these observations indicate a possibility of a decent rally unfolding in days to come. Hence, we recommend going long for a target of Rs.87 in coming weeks. The stop loss can be placed at Rs.73.70.  

NSE Scrip Code – HDFCAMC 

View  –  Bullish 

Last Close  –  Rs. 2,538.80 

Justification – This marquee name had given a stellar move last year but this was followed by a sharp correction early this year in the massive broader market sell-off. Surprisingly, this stock did not move at all when the entire market just took off after March lows and so many counters even surpassed their previous all time highs in the process. Now, we can see some encouraging signs on smaller degree charts as the daily time frame depicts a breakout from the bullish ‘Cup and Handle’ pattern. Stock prices managed to traverse the ‘200-day SMA’ as well and looking at the overall price-volume activity in last few weeks, we expect the stock to do well. Traders are advised to buy for a target of Rs.2,720 in coming days. The stop loss can be placed at Rs.2,478.

Disclaimer: Sameet Chavan is Chief Analyst- Technical & Derivatives at Angel Broking. The analyst may have positions in one or more stocks. Views are personal.